Material Flow Analytics
Lecture 1: Concepts and Principles
Supply chain strategy:
Sourcing strategies:
- Terminology: sourcing / procurement / purchasing
- Issues:
o Make vs. buy
o Single vs. multiple sourcing
o Local vs. global sourcing
- Considerations:
o Costs
Economies of scale
Core competences
Overhead
o Risks
Dependence
Disruptions
,Production strategies:
- Order penetration point (OPP) (or CODP)
- Key question: which part of the SC is only happening after a customer
order is received? (and which part is thus based on forecasts)
-
- Order penetration point (OPP) (or: CODP)
o Also, key driver of where inventory is located in SCs
o
Postponement: delayed product differentiation
- Move of OPP/CODP
, - E.g. from make-to-stock to assemble-to-order
o Often done to deal with increasing product variety and uncertain
demands (less specific products in stock)
- This move of the OOP/CODP can
o Happen within a single supply chain stage:
E.g. storing ingredients at a processing plant instead of
storing final products
o Coincide with moving activities to a later stage
E.g. transporting unlabeled products to a distribution
center, where last minute labelling or packaging is
performed after customer orders arrive
- Many factors determine optimal level of postponement
o Cost factors (e.g. inventory, modularization, …)
o Product factors (e.g. variants, customizability, …)
o Customer factors (e.g. order behavior, …)
o Supplier factors (e.g. strategic alliance, contracts, …)
- Key factor: uncertainty
Postponement example in slides (03 – operations page 11)
Distribution strategies:
- Network structure?
o Distribution network archetypes
- Typical structure:
o Direct shipment
o Use of intermediate locations
o Use of outsourced intermediate locations
- Cost considerations: facilities, inventory, transport
-
- Number of locations:
o Warehouses / DCs / fulfillment centers
o Key trade-offs
, Service: responsiveness
Costs: facilities, inventory, transport
- Typical approaches in distribution network redesign
o Re-evaluation of current locations
o Consideration of potential new locations
Typical procedure:
Identification of potential locations AND selection
criteria
Shortlist created based on hard constraints and/or
clearly dominated options
Evaluation and selection from shortlist (using e.g.
MCDM methods and/or optimizations)
o (often feeding into the same network model when using
optimization modelling)
Example from the book
Lecture 1: Concepts and Principles
Supply chain strategy:
Sourcing strategies:
- Terminology: sourcing / procurement / purchasing
- Issues:
o Make vs. buy
o Single vs. multiple sourcing
o Local vs. global sourcing
- Considerations:
o Costs
Economies of scale
Core competences
Overhead
o Risks
Dependence
Disruptions
,Production strategies:
- Order penetration point (OPP) (or CODP)
- Key question: which part of the SC is only happening after a customer
order is received? (and which part is thus based on forecasts)
-
- Order penetration point (OPP) (or: CODP)
o Also, key driver of where inventory is located in SCs
o
Postponement: delayed product differentiation
- Move of OPP/CODP
, - E.g. from make-to-stock to assemble-to-order
o Often done to deal with increasing product variety and uncertain
demands (less specific products in stock)
- This move of the OOP/CODP can
o Happen within a single supply chain stage:
E.g. storing ingredients at a processing plant instead of
storing final products
o Coincide with moving activities to a later stage
E.g. transporting unlabeled products to a distribution
center, where last minute labelling or packaging is
performed after customer orders arrive
- Many factors determine optimal level of postponement
o Cost factors (e.g. inventory, modularization, …)
o Product factors (e.g. variants, customizability, …)
o Customer factors (e.g. order behavior, …)
o Supplier factors (e.g. strategic alliance, contracts, …)
- Key factor: uncertainty
Postponement example in slides (03 – operations page 11)
Distribution strategies:
- Network structure?
o Distribution network archetypes
- Typical structure:
o Direct shipment
o Use of intermediate locations
o Use of outsourced intermediate locations
- Cost considerations: facilities, inventory, transport
-
- Number of locations:
o Warehouses / DCs / fulfillment centers
o Key trade-offs
, Service: responsiveness
Costs: facilities, inventory, transport
- Typical approaches in distribution network redesign
o Re-evaluation of current locations
o Consideration of potential new locations
Typical procedure:
Identification of potential locations AND selection
criteria
Shortlist created based on hard constraints and/or
clearly dominated options
Evaluation and selection from shortlist (using e.g.
MCDM methods and/or optimizations)
o (often feeding into the same network model when using
optimization modelling)
Example from the book
